The IMF has released the October 2010 World Economic Outlook. Chapter 3 studies the effects of fiscal consolidations on economic activity.
The recently published NCC study on the costs of doing business in Ireland can be found here.
Paul Krugman takes the cases of Ireland and Spain to address this question here.
(guest post by Michael Burke)
Today’s Financial Times carries an interesting piece from Martin Wolf on the severe difficulties being faced by Greece as it attempts to come to terms with its current economic crisis. http://www.ft.com/cms/s/0/eeef5996-0532-11df-a85e-00144feabdc0.html
The FT’s veteran commentator places Greece’s plight in the overall context of developments within the EU, and so has something to say about Ireland. Without minimising the problems of any country, he clearly shows that it is Greece which is an extreme case, not, as is often claimed here, Ireland.
“The problems of Greece are extreme, because it alone of the vulnerable eurozone member countries has both high fiscal deficits and high debt. Other countries with large fiscal deficits are Ireland (12.2 per cent of GDP in 2009) and Spain (9.6 per cent). But, while net public borrowing was 86 per cent of GDP at the end of 2009 in Greece, according to the OECD, in Ireland and Spain it was only 25 and 33 per cent, respectively. Meanwhile, Italy, with a net debt ratio of 97 per cent, had a deficit of “only” 5.5 per cent. Portugal is in the middle, with net debt of 56 per cent of GDP and a deficit of 6.7 per cent of GDP. Thus, the challenge for Greece is larger and more urgent than for the others.”
He also warns that those pinning their hopes on export-led growth are in perliously crowded boat in choppy waters, as they now comprise (at least) 70% of the world’s economy.
Finally, he has a very illuminating chart of unitl labour costs based on OECD data. Although the chart is small, the trend for Ireland is clear and unmistakeable. Ireland has already experienced a sharp reduction in unit labour costs relative to Greece, Italy and Spain. Of course, Germany is an outlier, with unit labour costs way below that group. But, although it isn’t stated by Martin Wolf, that’s based on the much stronger growth of German investment.
The focus of this year’s Patrick MacGill Summer School is the Irish economy. It features an array of excellent speakers.
Update: About 900 people crowded into the hall in Glenties Tuesday night to witness an unusually gripping evening of oratory on economic policy, with presentations by Eamonn Gilmore, George Lee and Brian Lenihan.
George Lee’s talk was particularly noteworthy and suprising.